What The "Real" Retail Spending Report Reveals

When it comes to the validity, accuracy and honesty of government-sourced data, sadly there is much to be desired in the time of the New Normal, when governments have made it very clear they will resort to any measure to boost confidence - from the wealth effect to flagrantly doctoring economic (dis)information.

Luckly for now at least, the private sector provides a somewhat credible alternative, although even that is rapidly being subsumed by the government apparatus (see ADP morphing into BLS-lite). Still, it is a useful data point for those who still care about the anachronism known as "fundamentals." So in order to supplement the retail data disclosed earlier which according to some was the "most important retail spending" report in years, one useful counterpoint is sales data as disclosed by credit card processors such as MasterCard (sadly often hiding behind subscription paywalls). Here are some highlights of what a parsing such a recent report reveals, courtesy of Bloomberg.

Since the end of 2009, growth in U.S. consumer spending has been driven largely by luxury goods and consumer staples. The middle class has less disposable income (or access to credit) available for discretionary purchases.

The growth of U.S. retail spending (excluding autos) slowed from an annual average pace of 8 percent in 2011 to 5.1 percent in 2012. In the first five months of 2013, U.S. retail sales have been growing at an annual average pace of just 3.5 percent.

U.S. consumers have been cutting spending on electronics, air travel and gasoline since the beginning of the year. In contrast, sales of necessities such as groceries and baby clothes are robust.

U.S. spending on home furnishings and repairs continues to be robust, which suggests that the housing recovery still has some legs.

On the other hand, the surge in spending on auto maintenance means that people are reluctant to buy new cars, preferring instead to repair what they already own. Similarly, there has been a significant decline in auto parts sales since the end of 2012.

U.S. purchases of high-end jewelry have grown much more slowly than total retail spending. Moreover, high-end jewelry spending hasn't matched its peak in December 2007.

Consumption in Canada has been weaker than in the U.S. for several years despite a much healthier labor market. This might be explained by the slowdown in China and the contraction in commodity demand.

U.K. luxury spending seems to be at least partly driven by the prices of oil and natural gas. That suggests that wealthy Russians and Middle Easterners are a significant source of demand for high-end goods in British stores.

The U.S., U.K. and Canada have all experienced a surge in "staycations" as families avoid expensive travel in favor of simpler -- and cheaper -- pleasures at home.

Perhaps reflecting the global sell-off in commodities, spending on luxury goods in the U.K. has been declining from prior-year periods for the past six months. Growth in U.S. luxury spending has slower than total U.S. retail sales in the first few months of 2013.

MasterCard Advisors estimates that Canadian retail spending has only increased by 0.5 percent in the past 12 months. As recently as March, the 12-month change in consumer spending was actually negative.

Stawks are merely doing their umpteen dead cat bounce, personally I think a top has been set in and the epic carnage in the Nikkei seems to be one of the precursors to the failure of the central banking put.

Bernanke overplayed his card with QEternity - it's effectiveness as a means to manipulate risk higher is coming to its limits. He got O re-elected and is close to avoiding a crash on his watch, so from his view it was successful. Unfortunately for him, there is still time left on his watch and the cracks are exposed.

Next would come purchases of equity investments, much like Japan (although what is not mentioned is that they buy small amounts of REITs, in relation to bond purchases). However, as it is not allowed by Fed mandate, it would require a crash first to justify it.

As in 2007, 2008, who knows - maybe we see an initial decline of 30%, then a bounce from extreme Fed measures, bank bailouts and one for the sacrificial altar (hello morgan stanley, i hardly knew ye!) and then the dip to sub 1,000 on the SP500.

It all makes perfect sense under reasonable expectations that earnings have peaked at $90 (reported, operating of $100) and a PE 8-12 multiple in line with a no-growth global environment.

"On the other hand, Quinlan says that the surge in spending on auto maintenance means that people are reluctant to buy new cars, preferring instead to repair what they already own. Similarly, there has been a significant decline in auto parts sales since the end of 2012"

Exactly. Unemployed guy I know did the same for an alternator. He says to me when I asked him how long it took; "shit, I got all day, everyday, so I had a beer after each bolt coming out and going back on."

Same thought here, but I figure it means that people (who have become very, umm, inadequate when it comes to repairing things themselves) are having the repairs/maintenance done by "professionals" rather than buying the parts and doing it themselves. The parts bought by the pros may not be included in this accounting.

We here are probably part of that shrinking minority which automaticlly equates maintenance and repair with "Parts plus weekend hours."

I own a pawn shop, and the change in our clientele over the years has changed drastically. It's no longer just lower income people pawning their 10k wedding ring to make rent. Since 2009 we see a lot more middle and upper inome people bringing in their Rolexes, high quality diamonds, and high karat jewelry to loan against. What does that tell you about the underlying economy?

We are now at the point where not only are our politicians lying to us all the time but all the economic data they give us is untrue as well. What use are elected reprentatives who only lie to their electorates?

"Since the end of 2009, growth in U.S. consumer spending has been driven largely by luxury goods and consumer staples. The middle class has less disposable income (or access to credit) available for discretionary purchases."

What % of the increse in spending is the inflation factor....loaf of bread goes from $3 to $3.50...is counted as and increse of sales of $.50....but same amount sold...and probably less as packaging is getting smaller and smaller too....

This "rate" 30 years ago meant a price doubled ever 10 years. Now that "rate" is nearer to ever 5.

The rate is a good indicator of the unsustainability of the current economic mechanism.

Now go pull up the DOW, stuff the logrithmic scale and look at the absolute values over the last 100 years. In the 70's the economy was triggered into a new rate. the preceding 60-70 through world wars did not change in value alot. Prices were consistent and the real argument of how this was also the real economy is MONEY MOVES FOR A BETTER INVESTMENT so if it is in stocks its in the rest. If it is not in the stocks then you can exlude the rest.

When we went to a savings and investing economy to a borrow and spend economy the death warrant on the American economy was signed. To a Kenysian E-con-artist-mist the consumer should just borrow money to buy stuff and when the loan comes due they should just borrow more money to cover the previous cost of borrowing ad infinitum. That might work for Central Banks and Goverments but it does not work for Joe Six-pack. The consumer is too busy trying to pay off his other debts and at the sametime deal with the dramtic price increases in his ESSENTIAL GOODS. At this point A debt Jubliee is in order but since debt is now money that would trigger the biggest deflationary event in the history of mankind.

They could fix the ecomony in seconds if they just stopped collecting income tax for a couple of years. Costs around the same as the total cost of QE infinity but actually works. Problem's that the banksters wouldn't get enough of a cut.

Add some more Data to That Visa inc reported on 2012 that 60% of the world's online fraud happens now in the US.

Liberal policies on goods returns and cancellations are virtually killing the mid size, small retailer which is oblige to go to Paypal/Ebay, Amazon and other aggregators to be able to receive a fairer treatment for an added price of 1.5 to 2% above internchange.

Consumer spending is one measurment to look at. return of personal debt to your card provider is another one.

http://mcccode.com/ reports on collective Data gathering that number of non founded claims is rising especially in the UK and US markets.

Economy is split into needs and non-needs. Needs will always hold up voila the food stamp programme and many other things. You can't reall exist without food and water neither so those ones hold up also. After that got to be BTL property as the last and final need. All these have got to be good for a hedge bet, not just gold or silver to hold your worth.

Unless of course through government handouts to the likes of GM, resulting in achieved profits, with dividends on shares and you guessed it ... shareholders on the welfare programme too. Just these welfare recipients are not named or shamed that way. The whole economic model is so messed up when a person working or investing obtains welfare because the level of government spending will grow to pay for it. ----->>>> 16 trillion and some.

All part of the game of keeping you in your place with CTRL-P and leverage.

The least expensive silver plan for a 21-year-old could cost $216 a month, but those earning only 150% of the poverty line (or $17,235 annually) may pay only $44 after receiving federal subsidies. A 40-year-old may pay $276 a month, or $40 after the subsidies.

States are slowly unveiling details of their plans, but California is the largest by far to release its rates. Some 5.3 million Californians may be eligible for coverage through the exchange, with more than 2.6 million of them qualifying for subsidies.